Department took years to address "unlawful" school bus contracts

By
Sarah Ashley Cantello,
30 August 2012

NI bus operators have been pressing the DoE for the past 10 years /

By Sarah Ashley-Cantello

AS children start returning to school this week, The Detail can reveal that the Department of Environment (DoE) took years to clarify European law on public transport, allowing school bus contracts non-compliant with EU law to go unchecked.

It has been confirmed to The Detail by the DoE that lucrative contracts for ‘home to school’ transport in Northern Ireland were awarded illegally by the Western Education and Library Board (WELB) to bus operators in the Republic of Ireland for at least the past academic year.

In a statement, the WELB claim they took action and suspended the contracts for the academic year 2011 to 2012 on June 30 2012, following the “DoE’s change of position.” But it’s likely that the same bus operators will continue to provide the school bus service for the academic year starting next week. The board has ruled out a re-tender, instead asking the southern-based operators to register in Northern Ireland and secure the correct paperwork to allow the contracts to be extended.

Bus operators based in the North have been pressing the department for the past 10 years for clarification on the law surrounding the awarding of contracts.

There has been no suggestion that the Republic of Ireland bus operators who have been operating the contracts acted improperly in winning them or in their operation of the bus service; rather the quarrel has been with how the board has handled the awarding of the contracts and the stipulations it did or did not attach to them. And, ultimately, that has been a result of the advice issued by the Department of Environment.

It was only in the past year that legal opinion was sought by Environment Minister Alex Attwood to clarify the law. And even then the Department still took almost three months to take action once this clarification was provided.

The DoE’s handling of the situation has angered bus operators based in Northern Ireland who say they have been lobbying the Department to clarify the EU regulations for years after they first suspected that contracts awarded to companies south of the border were at odds with EU law.

The Detail understands that after being made aware of the situation in July last year, Mr Attwood sought legal opinion in November. In April this year legal opinion advised that the contracts were unlawful, however the minister only officially acknowledged the error in a press release on June 14 2012 and the contracts were not suspended until June 30 2012.

The contracts worth over £300k had been tendered by the WELB for the academic year from August 2011 to June 2012. Not the first of their kind, the Department of Education has confirmed to The Detail the WELB had been awarding contracts to bus operators based in the Republic of Ireland for at least eight years prior to Minister Attwood’s announcement in June this year.

The suspension of the contracts is likely to only be temporary as the WELB has said it is willing to forgo a new tendering process if the RoI bus operators successfully apply for a licence to operate in Northern Ireland. The Detail has also received confirmation from the DoE that applications from three southern bus operators are currently being processed.

The new school term starts on Monday, September 3 2012 and the WELB confirmed to The Detail that “It is expected that the RoI bus operators will be granted their licenses in time to provide the ‘home to school’ transport service from the first day of the new school year. If they are not, contingency measures, to include the use of spare WELB vehicles will be implemented.”

THECONTRACT

The Western Education and Library Board is the education authority for the district councils of Fermanagh, Omagh, Strabane, Londonderry and Limavady.

‘Home to school’ transport is a service funded by the WELB for pupils eligible under the Department of Education’s school transport policy. Pupils, who live outside of the statutory walking distance of the closest school that has permitted their admission, are eligible for transport. The walking distance for primary school age is two miles and for post primary it is three. Approximately 21,000 children are provided with Home to School transport by the WELB through a mixture of transport providers including the WELB’s own fleet, Translink, and other sub-contracted buses and taxis.

EU regulations govern the transport of passengers by member states. They use the term “cabotage” to describe the transport of passenger journeys starting and finishing within Northern Ireland carried out by bus operators from the Republic of Ireland.

Cabotage becomes unlawful when the journeys are contracted on a “permanent”, “frequent”, or “regular” service or as part of a “series” of services for the same provider. It is however legal on a “temporary” basis.

RoI-based operators providing passenger services wholly within Northern Ireland have been determined to be unlawful

The Department of Environment is responsible for advising the WELB on the interpretation of EU regulations with regard to transport contracts.

For the academic year 2011-2012, the WELB held bus contracts with three Southern operators worth over £300k – this equates to 29% of its total transport budget. The board has estimated 700 children travelled on a home to school service run by a Southern operator during the academic year 2011-2012. For the same year, 12 bus operators from Northern Ireland accounted for £784k of the total WELB budget and transported 1,200 children from their homes to schools.

The Department of Education says that contracts are offered to operators “most economically and operationally advantageous to the (Western Education and Library) Board.”

The Department of Education also confirmed that the WELB has awarded contracts to southern operators for at least eight years. It is not clear how many of these contracts were legal. When asked by The Detail whether historic contracts were lawful, the DoE said: “Whether any contract was or was not compliant would depend on the detail of each contract and would depend on how the EU regulations was viewed or interpreted and indeed assessed by courts or the EU itself.”

“YEARS OF BEING IGNORED”

The Department of Environment has admitted to The Detail that concerns about cross border transport were raised by the Federation of Passenger Transport Northern Ireland (FPTNI) as early as 2008.

Karen Magill is Chief Executive of the Federation of Passenger Transport for Northern Ireland (FPTNI).

Ms Magill claims that bus operators from the Republic have been given Northern Ireland contracts for a minimum of 10 years and that the FPTNI formally brought it to the attention of the Department of Environment as early as 2005.

It is understood that Minister Attwood was not notified of the issue of bus cabotage until Derry MLA Mark Durkan spoke with him in July last year. At a subsequent meeting on November 23 2011 Minster Attwood instructed officials to seek legal advice to determine the accurate interpretation of the law.

In April 2012 it was stated in a written legal opinion that the laws regarding cabotage do indeed restrict bus companies from Republic of Ireland from operating a passenger journey that starts and ends in Northern Ireland, on a “permanent”, “frequent” or “regular” basis.

When asked by The Detail, the Department of Environment said “It was confirmed in a legal opinion from Senior Counsel in April 2012 that the bus operations in question were not compliant with EU legislation.”

However, the Department also said it wasn’t until after “interrogation of the advice” that Minister Attwood officially announced the Department’s error in a press release on June 14 2012.

NO PROSECUTIONS OR REPURCUSSIONS

Further questions put to the Department of Education revealed that the contracts held by Reddins Coach Hire Ltd, McGonagle Bus and Coach Hire and Jeremy Ayton Coaches who are all based in the Republic of Ireland were not suspended until June 30 2012.

The Detail can confirm that the Driver and Vehicle Agency (DVA) has not issued any prosecutions or penalties despite stating in their own advice sheet that “a bus found to be operating an unlawful service can be prohibited from continuing its journey and the operator may be subject to prosecution or have other penalties imposed”.

The Detail understands that these three Republic of Ireland bus operators are likely to have their applications for a Road Service (Bus Operator’s) Licence granted by the DVA. The licence allows them to lawfully be contracted within Northern Ireland on a “permanent, continuous or frequent basis”.

The WELB has issued a statement to The Detail in which it said “The three operators are currently making applications for Northern Ireland Road Service Operators’ Licences and if they are successful in their applications and thereafter present PSV (Public Service Vehicle) Licences for the requisite number of vehicles, the WELB will extend their contracts.”

The Detail has been told by the Department of Environment that Road Service (Bus Operators’) Licences must be applied for at least two months before the licence is required. This means that bus operators from the Republic would have had to apply for such a licence on July 3 2012 in order to be operational by the start of the home to school contracts on September 3 2012.

The Department of Environment also said “the average time for applications in recent months has been nine weeks.”

The DoE told The Detail that McGonagle Bus and Coach Hire and Reddins Coach Hire applied for the licence on June 20 2012, 10 days before their contracts with the WELB were suspended, while Jeremy Ayton Coaches applied on July 11 2012.

Karen Magill says that the DVA has set a precedent of taking much longer to process licence applications than the period between Minister Attwood’s announcement and the start of the new term would allow.

Ms Magill told The Detail: “We have been surprised by how quickly the licences have been agreed and how quickly the vehicles have been tested. Obviously to try and ensure they’re ready for September term this year.”

Local bus operators from the North West of the province say they are furious about how the issue has been handled by the DoE and the DVA.

The Detail has spoken to several Northern Ireland bus operators in Strabane and Derry. None would go on record to comment on the situation as they feel that their already struggling businesses would suffer further if they spoke out.

Bus operators from the North West have speculated that millions of pounds worth of contracts for work in NI have been granted to operators from the Republic.

IMPLICATIONSFORINSURANCE

The Detail received a copy of the advice sheet issued by the DVA at the time of Minister Attwood’s press release on June 14 2012. The DoE told The Detail the advice sheet is intended “to clarify the position for people hiring buses, bus operators, parents and the public”. A copy of the advice sheet is available under this article.

The advice sheet makes those issued with it aware that “there may also be implications for the validity of insurance held by the operator” of a service non-compliant with EU law.

The Detail asked the DoE for further information regarding the implications for insurance. The Department issued this response.

“That is a matter between the insured and their insurance company. All drivers are responsible for reporting all material facts to our motor insurers, and failure to do so may affect the insurer’s willingness to pay out on a claim.

“The Minister was aware of the potential insurance issues that might arise while the cabotage issue was resolved. He requested legal advice and was advised that users should be protected. The Minister ensured that he acted properly, legally and to safeguard the interests of users.

“The comment was added to the advice sheet so that those hiring buses were aware that there might be insurance implications that they may wish to clarify with operators before confirming a booking.”

After further questions, the Department told The Detail that there was not a risk to the safety of the children being transported or other road users whilst the Republic of Ireland bus operators were providing a service non-compliant with EU law.

“RADIATING THROUGHNORTHERN IRELAND”

Karen Magill claimed that the home to school transport contracts are not the only bus services being operated in the North West by RoI bus operators. She believes that Republic of Ireland bus operators are also being given frequent work direct from the schools.

"Radiating through Northern Ireland" /

When asked by The Detail if the Department of Education was aware that the individual schools also hired bus operators outside of the home to school transport contract for frequent journeys, the Department said it “is aware that schools may hire transport for their own purposes through private contracts. As the Department has no role in such contracts then it does not collect information about them.”

Regarding the value of these extra journeys Ms Magill said: “It’s hard to quantify just the level of business that is. But it is a considerable amount of money lost to the economy (in Northern Ireland).”

The Department of Education has also confirmed to The Detail that the four other education boards in Northern Ireland have home to school transport policies and similarly to the WELB use their own fleet, Translink and sub-contracted buses and taxis to provide the service.

However, the Department said that the other education boards do not have, and have never had, contracts with bus operators from the Republic of Ireland.

The WELB issued this statement to The Detail: “The contracts on which the three operators from the Republic of Ireland were successful to provide home to school transport, were awarded in the summer of 2011 in accordance with a suite of terms and conditions. One of the conditions was that the applicants held valid Road Service Operators’ Licences. At that stage, the Road Service Operators Licences held by these applicants was deemed to be valid.

“Following the DoE change of position with regard to cabotage, it was established that the Road Service Operators Licences were no longer valid for these operations. The WELB then moved to suspend the operators as expeditiously as possible, cognisant of its responsibilities in respect of ensuring that children were able to attend school.

“Following legal opinion the WELB resolved that the operators be afforded the opportunity to meet in full the terms and conditions of contract as understood following the DoE change of position. If they achieved this then the contracts would be extended.”

Meanwhile the DoE continues to seek advice on the whole subject of school bus contracts and international operators. The Department told The Detail that there are still differing opinions about the interpretation of the EU regulations “which is one reason why DoE has written to London to request London writes to the EU to ask for their further view on what the EU regulation may mean. One issue on which the EU is being asked to comment on is the interpretation of “temporary service” as detailed in the regulation.”

The three bus operators from the Republic of Ireland were contacted by The Detail.

Jeremy Ayton of Jeremy Ayton Coaches said he had only been following the process set down by the board when he entered the competition for the contract.

Don Reddin from Reddins Coach Hire Ltd told The Detail that he doesn’t believe the DoE’s reinterpretation of the EU law is correct and he says “It seems to be an anti-European” interpretation. However he has applied for the correct licence for his company and will continue to conduct business with the WELB.